EX-99.1 3 a03-4069_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Apple Reports Fourth Quarter Results

 

Revenues increase by 19 percent

 

CUPERTINO, California—October 15, 2003—Apple® today announced financial results for its fiscal 2003 fourth quarter ended September 27, 2003. For the quarter, the Company posted a net profit of $44 million, or $.12 per diluted share. These results compare to a net loss of $45 million, or $.13 per diluted share, in the year-ago quarter. Revenues for the quarter were $1.715 billion, up 19 percent from the year-ago quarter, and gross margins were 26.6 percent, up from 26.4 percent in the year-ago quarter. International sales accounted for 38 percent of the quarter’s revenues.

 

The quarter’s results include an after-tax investment gain of $6 million, a favorable accounting transition adjustment of $3 million related to Apple’s stock repurchase agreement, and a gain on settlement of the stock repurchase agreement of $6 million.  Without these items, net income would have been $29 million, or $.08 per share.  Management believes that presentation of results excluding these items provides meaningful supplemental information regarding the Company’s operational performance.

 

Apple shipped 787 thousand Macintosh® units during the quarter, up 7% from the year-ago quarter, as well as 336 thousand iPodÒ units, up 140% from the year-ago quarter.

 

“It was a great new product quarter for Apple,” said Steve Jobs, Apple’s CEO. “We launched the Power Mac G5, the fastest personal computer in the world, new PowerBooks and new iPods.  Plus, we’re delivering Panther, the next major release of Mac OS X, later this month and we’ll have some exciting news regarding our music efforts tomorrow.”

 

“We are very pleased to have exceeded our revenue and profit targets for the fourth quarter,” said Fred Anderson, Apple’s CFO. “Our balance sheet remains strong and our working capital management is among the best in the industry.  Looking ahead to the first quarter of fiscal 2004, we expect a sequential increase in revenues to about $1.9 billion and a slight sequential increase in GAAP earnings relative to the September quarter.”

 

For the year, the Company reported net income of $69 million on revenues of $6.21 billion compared to net income of $65 million on revenues of $5.74 billion in 2002.

 

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

 

Apple will provide live streaming of its Q4 2003 financial results conference call utilizing QuickTime™, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:30 p.m. PT on Wednesday, October 15, 2003 at http://www.apple.com/quicktime/qtv/earningsq403/ and will also be available for replay. The QuickTime player is available free for Macintosh and Windows users at www.apple.com/quicktime.

 

This press release contains forward-looking statements about future revenues, profit, and products, including statements regarding delivery of Mac OSÒ X version 10.3 "Panther," announcements regarding the Company's music efforts and estimated revenues and earnings for the first quarter of fiscal 2004.  These statements involve risks and uncertainties and actual results may differ. Potential risks and uncertainties include continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company’s reaction to them may have on consumer and business buying decisions with respect to the Company’s products; the ability of the Company to make timely delivery of new programs, products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and

 

 

reduced end-user purchases relative to expectations; possible disruption in commercial activity as a result of major health concerns, such as Severe Acute Respiratory Syndrome (SARS); risks associated with the Company’s retail initiative including significant investment cost, uncertain consumer acceptance and potential impact on existing reseller relationships; the effect that the Company’s dependency on manufacturing and logistics services provided by third-parties may have on the quality or quantity of products manufactured; and the ability of the Company to successfully evolve its operating system and attract sufficient Macintosh developers. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-Q for the quarter ended June 28, 2003 and the Company’s Form 10-K for the 2003 fiscal year to be filed with the SEC.  The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

Press Contact:

Steve Dowling

(408) 974-1896

sdowling@apple.com

 

Investor Relations Contacts:

Nancy Paxton

(408) 974-5420

paxton1@apple.com

 

Joan Hoover

(408) 974-4570

hoover1@apple.com

 

NOTE TO EDITORS: For additional information visit Apple’s PR web site (www.apple.com/pr/) or call Apple’s Media Helpline at (408) 974-2042.

 

 

CONSOLIDATED BALANCE SHEETS

 

(In millions, except share amounts)

 

 

 

September 27,
2003

 

September 28,
2002

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

3,396

 

$

2,252

 

Short-term investments

 

1,170

 

2,085

 

Accounts receivable, less allowances of $49 and $51, respectively

 

766

 

565

 

Inventories

 

56

 

45

 

Deferred tax assets

 

190

 

166

 

Other current assets

 

309

 

275

 

Total current assets

 

5,887

 

5,388

 

Property, plant, and equipment, net

 

669

 

621

 

Goodwill

 

85

 

85

 

Acquired intangible assets

 

24

 

34

 

Other assets

 

150

 

170

 

Total assets

 

$

6,815

 

$

6,298

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,154

 

$

911

 

Accrued expenses

 

899

 

747

 

Current debt

 

304

 

—

 

Total current liabilities

 

2,357

 

1,658

 

Long-term debt

 

—

 

316

 

Deferred tax liabilities and other non-current liabilities

 

235

 

229

 

Total liabilities

 

2,592

 

2,203

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock, no par value; 900,000,000 shares authorized; 366,726,584 and 358,958,989 shares issued and outstanding, respectively

 

1,926

 

1,826

 

Deferred stock compensation

 

(62

)

(7

)

Retained earnings

 

2,394

 

2,325

 

Accumulated other comprehensive income (loss)

 

(35

)

(49

)

Total shareholders’ equity

 

4,223

 

4,095

 

Total liabilities and shareholders’ equity

 

$

6,815

 

$

6,298

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In millions, except share and per share amounts)

 

 

 

THREE MONTHS ENDED

 

TWELVE MONTHS ENDED

 

 

 

September 27,
2003

 

September 28,
2002

 

September 27,
2003

 

September 28,
2002

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,715

 

$

1,443

 

$

6,207

 

$

5,742

 

Cost of sales

 

1,259

 

1,062

 

4,499

 

4,139

 

Gross margin

 

456

 

381

 

1,708

 

1,603

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

111

 

116

 

471

 

446

 

Selling, general, and administrative

 

314

 

278

 

1,212

 

1,109

 

Restructuring costs

 

—

 

6

 

26

 

30

 

Purchased in-process research and development

 

—

 

1

 

—

 

1

 

Total operating expenses

 

425

 

401

 

1,709

 

1,586

 

Operating income (loss)

 

31

 

(20

)

(1

)

17

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on non-current investments, net

 

8

 

(65

)

10

 

(42

)

Interest and other income, net

 

16

 

25

 

83

 

112

 

Total interest and other income, net

 

24

 

(40

)

93

 

70

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for (benefit from) income taxes

 

55

 

(60

)

92

 

87

 

Provision for (benefit from) income taxes

 

14

 

(15

)

24

 

22

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before accounting changes

 

41

 

(45

)

68

 

65

 

 

 

 

 

 

 

 

 

 

 

Cumulative effects of accounting changes, net

 

3

 

—

 

1

 

—

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

44

 

$

(45

)

$

69

 

$

65

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share before accounting changes:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

$

(0.13

)

$

0.19

 

$

0.18

 

Diluted

 

$

0.11

 

$

(0.13

)

$

0.19

 

$

0.18

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

$

(0.13

)

$

0.19

 

$

0.18

 

Diluted

 

$

0.12

 

$

(0.13

)

$

0.19

 

$

0.18

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings (loss) per share (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

362,191

 

358,910

 

360,631

 

355,022

 

Diluted

 

370,733

 

358,910

 

363,466

 

361,785

 

 

 

 

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except share and per share amounts)

 

THREE MONTHS ENDED SEPTEMBER 27, 2003

 

 

 

As Reported

 

Pro Forma
Entries

 

Pro Forma

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,715

 

 

 

$

1,715

 

Cost of sales

 

1,259

 

 

 

1,259

 

Gross margin

 

456

 

 

 

456

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

111

 

 

 

111

 

Selling, general, and administrative

 

314

 

 

 

314

 

Total operating expenses

 

425

 

 

 

425

 

Operating income

 

31

 

 

 

31

 

 

 

 

 

 

 

 

 

Gain on non-current investments

 

8

 

(8

)(a)

—

 

Interest and other income, net

 

16

 

(6

)(b)

10

 

Total interest and other income, net

 

24

 

(14

)

10

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

55

 

(14

)

41

 

Provision for income taxes

 

14

 

(2

)(c)

12

 

 

 

 

 

 

 

 

 

Income before accounting change

 

41

 

(12

)

29

 

 

 

 

 

 

 

 

 

Cumulative effect of accounting change

 

3

 

(3

)(d)

—

 

 

 

 

 

 

 

 

 

Net income

 

$

44

 

$

(15

)

$

29

 

 

 

 

 

 

 

 

 

Earnings per common share before accounting change:

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

 

$

0.08

 

Diluted

 

$

0.11

 

 

 

$

0.08

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

 

$

0.08

 

Diluted

 

$

0.12

 

 

 

$

0.08

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share (in thousands):

 

 

 

 

 

 

 

Basic

 

362,191

 

 

 

362,191

 

Diluted

 

370,733

 

 

 

370,733

 

 

Notes:

(a)

 

Pre-tax gain on sale of non-current investments

(b)

 

Gain on settlement of forward stock repurchase agreement

(c)

 

Tax impact of gain on sale of non-current investments

(d)

 

Transition gain from the adoption of SFAS No. 150 related to the Company’s forward stock repurchase agreement